Economics 101

Our country is in trouble. It is all too obvious to almost everyone that the recent economic downturn has affected us in a substantially manner. These changes are deep, serious and, unfortunately, mostly permanent. In the words of Bob Dylan, “Times, they are achangin”. While there currently is a general feeling of malaise concerning our future, I believe that given the will, there still is time to turn our economy around – but it will not be easy and most of the pervasive politically popular statements are totally wrong.
Many of our backbone employment opportunities have migrated overseas and will not return. This is an economic reality, should be accepted and adjusted to. While painful in the short-term, this eventually will be advantageous to everyone involved. Now is not the time to erect trade barriers and retreat within fortress America. History has taught us that any country attempting to hide behind protective walls eventually must pay a significantly higher price resulting from inferior products, slower growth and corruption. This is not to say that if this trend is ignored that everything will be great. Like any illness, action definitely is necessary to correct this condition.
A century ago, introduction of the automobile also significantly affected employment in our country. Attempts were made by everyone from blacksmiths to buggy-whip makers to impede this change. Similarly, the music industry has fought every innovation from the player piano, phonograph, radio, DVD and now online downloads. We should not be Luddites attempting to hold back progress. No one in the past has ever been successful holding back the tides of change and it would not be beneficial to attempt to do so now. Let’s not be buggy-whip makers.
We must accept that we alone are responsible for our current problems – don’t blame China, Saudi Arabia, India or anyone other than ourselves. Yes, not everyone always plays fair – we certainly never have; why demand that everyone else plays by our rules?
I will not pretend to have all the answers – I am not an economist. I do however believe that many of the shrillest voices have the least insight into the problems we currently face.
National debt is a problem and one that needs to be reduced. It is, contrary to many current claims, not the actual problem but merely a symptom of the problem. The national debt as a percentage of GDP has not essentially increased over the past twenty years and the percentage of the national budget expended servicing the debt actually has decreased. Some debt, such that owed to ourselves, probably is beneficial.
Taxes are not our problem. If we really want better law enforcement, fire protection, border security, educational system, transportation, etc., it needs to be paid for. When I see something in a store that I want, I expect to pay for it. There is no free lunch; none of it comes for free. The U.S. has one of the lowest taxation rates of any developed country. This is another case of getting what you pay for.
While much of the stimulus funding could have been allocated more wisely, the case can be made that after the unparalleled spending during the Bush years, a much greater expenditure was necessary to revive our economy than was approved. States should have been held responsible for maintaining their infrastructure rather than going hat in hand to the federal government. Stimulus funds would have been more wisely been used to encourage future economic growth: research, high speed transportation, sustainable energy, education, communication…
Small businesses with nineteen or fewer employees create 65 percent of all new jobs and employ 50 percent of the private-sector workforce. Little consideration seems to have been given as to how to encourage start-ups. Venture capitalists are reluctant to fund new businesses in the current economic environment and banks are not making loans. Our tax structure actually makes it difficult for startups and needs revision. Businesses find it difficult to compete under requirements to provide health care and fund retirement programs that are government provided in other countries. Rather than objecting to national healthcare and retirement systems, they have become a necessity for our nation’s economic survival. Improvements to the current system are needed, they obviously are not perfect, but potentially can remove a significant burden from the backs of our business so they once again can be competitive internationally.
The United States has gone from having the best educational system in the world which everyone envied, to one that is at best second-rate and dropping fast (currently rated 51st in science and mathematics worldwide). Business can not thrive without a skilled workforce. Not only must more be expected of our students (minimum standards raised, school year and hours attended increased…), mandatory attendance should be increased from 16 to 18; college costs eliminated; opportunities expanded. Yes, efficiency can be improved but the old adage “if you think education is expensive, try ignorance” is all too true and we can see it in our countries increasing lack of competitiveness. Not everyone has to go to college – trade skills should be a viable alternative but a real emphasis has to be made to encourage students to major in the science and engineering disciplines. That is our future.
And while on the issue of education, we must not become a nation of current day blacksmiths and buggy-whip makers. Continuing life-long education must be available to everyone. Many people currently out of work are not prepared for the opportunities in this changed economic environment. It does not make sense to continue paying unemployment benefits to someone that has been out of work for an extended period. Continued benefit receipt should be contingent upon re-education and the acquisition of new skills.
In the past, technological innovation was funded primarily by the Department of Defense and motivated either by actual or the threat of war. Much research was funded either directly or indirectly by ARPA (the DOD Advanced Research Projects Agency). An alliance between the military, universities, and corporations originally was formed by Vannevar Bush following the Second World War and very effectively resulted in much of the scientific and engineering innovation responsible for future job growth during the postwar period. Unfortunately, much of this funding was either totally eliminated or significantly reduced following Vietnam. Now we are paying the price for this mistake.
Similarly, it has been necessary for businesses and corporations in this country to reduce the percentage of their research investments as a result of changes to tax structures. We no longer have the corporate research typified by AT&T Bell Labs, IBM, GE Schenectady Research, Xerox PARC and other similar corporate institutions. Likewise, research in many of our universities and other institutions of higher learning has likewise been reduced by lack of funding. Not only was this funding an important motivator for basic research, it also enabled most graduate school attendance. Without sufficient funding, where will the next break-through in nanotechnology, communications, energy, transportation or biology come from? These are the employment opportunities of the future but, unfortunately, if they are not developed here in our country, then they most likely will be in China or India. Between six and ten percent of our national budget should be devoted exclusively to basic research and development.
As I said, I do not believe in a free lunch. If we have the basic will to survive, and I believe we do, we have to pay for it. This, unfortunately, means increased taxes – not the reduction currently favored by most politicians. Rather than an increase in income taxes, I would prefer a national sales tax, probably of about 6-7 percent, restricted to research and higher education. Yes, this would be an unpopular suggestion but I think it is our only alternative to becoming a second-class nation.
I believe in the future of our country but the old ways no longer work. We can not turn our nation around over night; our problems are too endemic. While it will take some time, if we have the will to succeed and change – we can do it.
OK… Those are some of my ideas. Now – what do you think?

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About lewbornmann

Lewis J. Bornmann has his doctorate in Computer Science. He became a volunteer for the American Red Cross following his retirement from teaching Computer Science, Mathematics, and Information Systems, at Mesa State College in Grand Junction, CO. He previously was on the staff at the University of Wisconsin-Madison campus, Stanford University, and several other universities. Dr. Bornmann has provided emergency assistance in areas devastated by hurricanes, floods, and wildfires. He has responded to emergencies on local Disaster Action Teams (DAT), assisted with Services to Armed Forces (SAF), and taught Disaster Services classes and Health & Safety classes. He and his wife, Barb, are certified operators of the American Red Cross Emergency Communications Response Vehicle (ECRV), a self-contained unit capable of providing satellite-based communications and technology-related assistance at disaster sites. He served on the governing board of a large international professional organization (ACM), was chair of a committee overseeing several hundred worldwide volunteer chapters, helped organize large international conferences, served on numerous technical committees, and presented technical papers at numerous symposiums and conferences. He has numerous Who’s Who citations for his technical and professional contributions and many years of management experience with major corporations including General Electric, Boeing, and as an independent contractor. He was a principal contributor on numerous large technology-related development projects, including having written the Systems Concepts for NASA’s largest supercomputing system at the Ames Research Center in Silicon Valley. With over 40 years of experience in scientific and commercial computer systems management and development, he worked on a wide variety of computer-related systems from small single embedded microprocessor based applications to some of the largest distributed heterogeneous supercomputing systems ever planned.
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2 Responses to Economics 101

  1. test1234 says:

    Hmm is anyone else experiencing problems with the pictures on this blog loading? I’m trying to determine if its a problem on my end or if it’s the blog. Any suggestions would be greatly appreciated.

    • lewbornmann says:

      While I have not heard any other comments regarding images loading, that does not exclude possible problems. Any pictures are standard boilerplating so doubt there are any problems but if you continue to experience any difficulty, please contact WordPress.com. Good luck…

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